Solar stocks continued to fall after disappointing earnings from LDK Solar, negative news out of China and an industry report noting that solar panel manufacturers face three more years of tough conditions. LDK Solar posted a larger-than-expected quarterly loss and warned of difficult market conditions ahead. Solar equipment manufacturers have struggled to cut costs as prices for panels have plummeted by more than half in the past year amid a glut of supplies. LDK posted a gross margin of negative 66% "due to serious price erosion, which was steeper than expected." Separately on Tuesday, renewable power consultancy firm GTM Research issued a new report stating that solar panel manufacturers face three more years of tough conditions until the market shuts down excess production capacity. Production capacity for photovoltaic solar panels this year stands at 59 gigawatts (GW), about double the 30 GW expected to be sold into the global market. "The training wheels of subsidies are coming off, and the next few years will see the industry's first attempt to ride without support," GTM said. Also on Tuesday, Reuters reported, according to parliamentary sources, that Germany's government and federal states have agreed to cut incentives for the solar power industry after a weeks-long dispute. A parliamentary mediation committee set up to negotiate between the lower and upper houses of parliament could approve the deal on Wednesday, the sources said. Under the compromise, one-off cuts in incentives from 20-30% from April are to remain and incentives will be capped for installed capacity of 52 GW.

Update - Shares of some solar stocks have turned positive this morning.